Socialised Childcare?

Bad luck for staff, shareholders, suppliers etc if the thing sinks (whatever the merits of Mr Groves kiddy empire). And interesting prioritisation of his time by the PM.

The main game seems to remain the wildly endangered Australian species “Working Families”.

My mother maintains this is a euphemism for ‘working class’, but it seems a lot less inclusive to me..what if you aren’t working, not married and/or don’t have kids – Kevin and Julia don’t want to know you or what ?

And they have a poll you can participate in – “should childcare centres be run for profit ?”. Do a have a click to see what folks in your local area think, but no prizes for guessing what the majority of participants want (Freebies, freebies).

The way this trend is going I would like to suggest a simpler poll would be “What do Working Families actually believe they SHOULD pay for themselves ?

a) widescreen plasma TVs
b) holidays
c) movie tickets
d) all of the above, or
e) none – The Gov’mnt should pay for everything – they’ve got piles of money and we are just Working Families”

Or I am getting unduly cynical ??

I guess we shouldn’t be that surprised: they’ve already been talking about free childcare. But the real depressing thing is the number of people who would applaud a government takeover. After all, another Australian headline declares “Parents hope market won’t steal their centre”

Perhaps some of these shareholders were merely rent-seekers anyway, hoping to profit from further government childcare subsidies… Actually, that thought makes me feel a little better.

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15 thoughts on “Socialised Childcare?”

I’m still fairly convinced that economic restraint will rule in the first term of this government. They’re scared shitless about inflation if nothing else. They also know that sometime before the next election the Liberals will find something involving excessive spending which they’ll use to position Labor as economically irresponsible.

“I’m still fairly convinced that economic restraint will rule in the first term of this government”

For the most part, so am I… but if the public attitude is one that demands intervention, you know they’ll be happy to oblige. Howard wasn’t any better with this type of welfare (baby bonuses, etc), so it isn’t a criticism unique to Rudd or the ALP.

The problem for the ALP is that it is OK for the Liberals to criticise their spending programmes, the Liberals have positioned themselves with the small government brand, but it was more difficult for the ALP to criticise Liberal spending, since they have painted themselves as the big government party. So paradoxically, it is easier for the a Liberal government to increase spending without political backlash than it is for the ALP.

With Rudd’s tax cuts and a paranoia about inflation and economic credentials, the ALP could be the default smaller spender (or at least keep government growth at the same level as GDP growth).

For the same reason, it is easier for the ALP to pass deregulation legislation, since they can rely on the Liberals for support. So the ALP could be the reforming party as well, as they were under Hawke/Keating.

What drives me nuts about childcare is that childcare workers will almost without fail all tell you two things about their industry:-

1. There are long waiting lists to get into childcare.
2. Childcare workers are not paid enough.

The obvious solution to somebody that thinks about such things in economic terms is that they should increase the price. However the solution they themselves typically suggest is that the government should provide more financial assistance.

For community based childcare centres the management committees are generally comprised of parents with children at the centre. As such they have a vested interest in keeping prices low and no interest in shortening queues (they are by this stage insiders and typically have been for a while). They do however have an interest in retaining good staff at the centre (ie they want kids well cared for) so asking for more government assistance is a logical idea and given that the feds have the money they are the logical ones to tap. The executive management at the childcare centres generally follows this lead and the staff are inculcated with the idea (they are not generally economists).

My sister is in childcare. The unfortunate thing about education, nursing, childcare is the whole entitlement issue. Once a service becomes a right, the workers in that service become semi-slaves to the service provider, unless there is sufficient mystique about what they do, like doctors. She shares the same attitude of more government subsidies. Part of the problem is that the people attracted to these industries are themselves egalitarians to begin with.

Raising the price would work if not for subsidies. If the prices rose and we saw lareger profits, there would be more of an incentive to get into the industry. Instead you are likely to see more inefficiency and higher costs substitute better outcomes or more profit.

1. Cut income taxes and subsidies to the industry.

2. Relax planning regulations.

3. Move away from the trend towards accrediation and education of carers of very young children (it might be great but it shouldn’t be absolutely necessary). If we didn’t have overly rigid privacy laws, a similar check to “Working With Children Check” could be done privately.

What we need is more childcare centres. That is how it will happen with the necessary staff. Profits will be higher for two reasons: greater efficiency (less subsidies) and lower costs (less regulation). With less market power and higher profits, the demand for staff and therefore wages will be higher.

That’s idealistic and not a full blown policy, but it is a start with a decent rationale.

Related to, and a similar argument against, can be made for compulsury maternity leave. It should be left up to the market. There is a very good reason why.

If you are financially better off without sending your children to daycare or taking maternity leave, then why in aggregate is society better off subsidising a lifestyle choice?

Many of the arguments as to why such services will be provided for voluntarily are also used by those who favour socialised systems. If businesses want to retain women and want childcare etc, it is not a reason to socialise it. If a firm favours socialised services, then credibly the firm is receiving some kind of wage subsidy. Again, how is society in aggregate better off by subsidising one firm and picking winners?

I actually don’t care if the centres are run for profit or not, but the whole system works better if we remove the subsidies, lessen regulation on both occupational licensing & development, and increase disposable income.

The reason for the share price drop in ABC Childcare is pure politics, many leading Liberal Party members were involved in the establishment of it and shareholders are nervous this goverment will punnish them. a talk given at the lefty “Politic in the Pub” called on them to do just that prior to the election I can find the transcript in full but the details are

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